(b) It reveals that they are interested not only in a special personal deal to sell their stock at $14.00 a share, without being subject to the 150,000 share limit in the Kleiner, Bell offer, but also in a special personal deal to acquire majority control interest in Columbia. Greenberg's reasoning, where he says that the $15.00 per share majority control offer shows that National's offer is inadequate, is palpably specious. Comparing that $15.00 offer, if in fact it was made, to the $14.00 provision referred to in their offer to Kleiner, Bell reveals that the extra dollar per share is significant only to an assured acquisition from a control shareholder of majority control, and that otherwise they consider $14.00 to be an adequate price. Moreover, just as their $14.00 offer is solely for their own personal benefit, so the $15.00 offer in no way provides any benefit to any shareholder of Columbia other than themselves. In fact, the fact that the $15.00 offer purportedly was made to National, indicates that they are perfectly happy to have the shareholders accept National's exchange offer so that National can acquire the Columbia shares and thereafter make a control deal with Roven and Spiegel. Therefore, I feel that these enclosures are even stronger in our favor than I anticipated they might be. Nevertheless, I am reinforced in my opinion that they should not be presented at this time to the Commission. We have already made strong allegations to the Commissioner about Roven and Spiegel's selfish interest. The enclosures prove those allegations and intensify them. However, I think they can be used just as effectively after Roven and Spiegel file their bill of particulars, if they do. In fact, sending the enclosures to the Commissioner and explaining their significance to him may confuse him at this point. In addition, our remaining silent in the face of these offers may have some effect on the nature of the charges which they may make. I am sending this over by messenger so that if you have any thoughts or comments about action to be taken with respect to tomorrow's deadline you can call me so that we can discuss the situation. I'll be in the office until about 7:15 this evening in case you get tied up. Sincerely, ROBERT H. POWSNER, LAW OFFICES, HINDIN, STERLING, MCKITTRICK & POWSNER, Re National General Corporation. File No. 123313-LA. Mr. CHARLES E. RICKERSHAUSER, Jr., Commissioner of Corporations, Division of Corporations, DEAR COMMISSIONER RICKERSHAUSER: As was set forth in our letter of transmittal dated March 20, 1964, we contemplated forwarding to you a number of further opinions of investment bankers with respect to the market value of the new National General securities to be issued in connection with the proposed National General exchange offer presently under consideration by your office. In that connection, you will find enclosed herewith the following items: (1) Letter from a Vice President of Mitchum, Jones & Templeton, Incorporated, members of the New York Stock Exchange, Pacific Coast Stock Exchange and the American Stock Exchange, setting forth his opinion as to the fair market value of the proposed new National General securities; and (2) Affidavit of Mr. Paul Hallingby, an officer of White, Weld & Co., Incorporated, member of the New York Stock Exchange, setting forth his opinion as to the market value of said securities. We have previously submitted to you the Affidavit of Mr. Burt Kleiner, one of the partners of Kleiner, Bell & Co., a member of the New York Stock Exchange, which, in addition to other matters, sets forth his opinion as to the market value of said securities. We have also previously furnished you an Affidavit of Mr. Eugene V. Klein, President of National General Corporation, pointing out the errors and misstatements in the "Objections to Issuance of Permit", filed in the pending matter by Arthur Greenberg, Esq., on behalf of Messrs. Milan Roven and Abraham Spiegel. In my discussion with Mr. Herbert A. Smith of your office, it was my understand ing that a final decision, as to whether or not a hearing would be required on this matter, would not be made until such time as we had an opportunity to file the above referred to material with your office. In view of the clear-cut errors contained in the "Objections", the information contained in the above referred to material filed on behalf of National General and the material previously filed in your office in connection with the application for the Permit under consideration, we strongly urge that there is no necessity for further delay in the granting of the requested Permit, that the objectors' request for a hearing be denied and that the Permit be issued forthwith. In this connection, we wish to point out that several weeks' delay have already occurred at the request of the objectors and their counsel in order to allow them time within which to file their objections and the basis for such objections. To date, as has been clearly pointed out by the material filed on behalf of National General, objectors' principal argument as to market value of the proposed debentures is based on a "mistake" as to the nature of the subordination provision of these debentures. Despite the time granted objectors for that purpose, no independent opinions or analyses supporting the objectors' contentions have, to our knowledge, been submitted. In this same period of time, National General has assembled and presented to you substantial additional evidence as to the "fair market value" of the securities to be issued. We assume that the objectors now realize that their analysis of the market value of the proposed debentures is based upon an incorrect assumption. We can see no advantage, therefore, to the holding of a hearing to review any opinions objectors may have originally intended to present, if any such opinions exist, where such opinions were based upon erroneous assumptions. Very truly yours, BARRY H. STERLING, (For the firm). Mr. BARRY H. STERLING, NATIONAL GENERAL CORP., Beverly Hills, Calif., March 24, 1964. Hindin, Sterling, McKittrick & Powsner, DEAR BARRY: As per your recent letter to Harold Lipton and our yesterday's telephone conversation, I enclose a copy of the Committee's report in regard to Columbia Savings and Loan Association. As indicated in the transmittal letter dated February 18, 1964 included under the "Y", the report is not complete. Copies of all material added to the report will be forwarded to you at the same time it is forwarded to our directors. Best regards. Sincerely, ALAN MAY. MITCHUM, JONES & TEMPLETON, INC., NATIONAL GENERAL CORP., In Care of Hindin, Sterling, McKittrick & Powsner, GENTLEMEN: You have asked for our independent opinion regarding the fair market value of the proposed National General Corporation 5% subordinated debentures, due May 15, 1984 and warrants attached to such debentures permitting the holders to purchase National General common stock prior to May 15, 1974 at a price of $15.00 per share. Mitchum, Jones & Templeton, Incorporated, established in 1920, operates as brokers, underwriters and distributors of investment securities. The undersigned has had 17 years experience in the field of securities analysis and is Vice President in charge of Mitchum, Jones & Templeton Incorporated's research and new business departments. The latter operations covering underwriting, private placements, mergers and sales. In determining the fair market value of the above mentioned debentures our evaluation included consideration of such factors as the general nature of the operations of National General, the company's finances and capitalization, and its historical earnings results as well as the general level of bond prices, particularly for issues of approximately comparable quality. In our opinion, the 5% subordinated debentures, due May 15, 1984 have a fair market value of 80% to 82% of their par value. (For purposes of conservatism, we have included a range, recognizing that securities when traded will generally move around the specific point which professional experts would determine the precise fair market value). In connection with the evaluation of the warrants, consideration was given to the market for existing warrants of other companies and the premiums which they command over exercise price in addition to the basic study of National General. In our opinion, each warrant (which represents a 10 year call on National General common stock at $15.00 per share) has a fair market value of $2.00 to $2.50 per share. We shall, of course, be happy to discuss this matter with the interested parties in greater detail. Assiant is a partner of the investment banking firm of White, Weld & Co., members of the New York Stock Exchange. I am familiar with the proposed 5% Subordinated Debentures due 1984 of National General Corporation, proposed to be issued in connection with the proposed exchange offering to the guaranty shareholders of Columbia Savings & Loan Association. I am also familiar with the proposed 10-year Warrants to purchase shares of National General Corporation Common Stock at $15 per share, proposed to be issued to said same Columbia shareholders in connection with said offering. In my opinion, based on my experience as to the market prices of similar securities and a detailed analysis of National General Corporation from a financial standpoint, the said Debentures will have an opening market price of at least 80% of par, and the said Warrants would probably have a market price, in the event of trading therein, based upon present market conditions and considering that the Debentures may be turned in at face value for exercise of the Warrants, of approximately $2.00 per Warrant. PAUL HALLINGLY, Jr. Subscribed and sworn to before me this 23d day of March, 1964. EDGAR R. GUNDERSEN, Notary Public, State of New York. LAW OFFICES, HINDIN, STERLING, MCKITTRICK & POWSNER, Re National General Corporation. File No. 123313-LA. Division of Corporations, Los Angeles, Calif. DEAR COMMISSIONER RICHERS HAUSER: In connection with the above matter, we have previously furnished you with opinions of various experts in the investment banking field as to the market value of the National General debentures and warrants to be issued in connection with the proposed National General exchange offer to Columbia Savings and Loan Association Guarantee stockholders. I am enclosing herewith for your consideration an additional opinion as to the market value of such securities. This opinion is from the Resident Manager of an office of Dempsey-Tegeler and Co., Inc., investment bankers with offices throughout the United States. Very truly yours, BARRY H. STERLING, (For the firın). DEMPSEY-TEGELER AND CO., INC., Mr. RALPH J. SHAPIRO, Beverly Hills, Calif. DEAR MR. SHAPIRO: I have acquainted myself with the proposed issue of 5% Subordinated Debentures of 1984 of National General Corporation, as well as the ten year Warrants to purchase National General Corporation Common at $15.00 per share proposed to be issued in a contemplated exchange offering to the guarantee shareholders of Columbia Savings and Loan Association. The unit of one $15.00 face amount debenture and one Warrant to purchase a share of National General Common Stock, in my opinion, based on my experience and knowledge as to the market prices of similar securities, sell for a price that will be approximately $14.00 per unit. This evaluation opinion is predicated on the presently existing market conditions and would change with a change in the said market conditions. I trust that my evaluation may be of some help to you. JACK M. LEVY, LAW OFFICE, HINDIN, STERLING, MCKITTRICK & POWSNER, Re National General Corporation-Columbia Savings and Loan Association. Mr. BURT KLEINER, DEAR BURT: It is my understanding that, in connection with the transaction between National General Corporation and Kleiner, Bell & Co. and Allen & Company on the 150,000 units, the attorney for Allen & Company, George Duff, will be representing you and Allen & Company. It is my further understanding that he will be working directly with Harold Lipton at National General on this matter. Gene Klein, however, wanted me to call to your attention the desires which both he and Nate Kates had as to the handling of allocations among the various accepting Columbia shareholders to determine whether they meet with your approval. As you will remember from the agreement between National General and certain Columbia shareholders, there will be an equitable proration between accepting Columbia shareholders. Final details as to handling the preration are, however, left up to Kleiner, Bell & Co. Gene and Nate Kates would like small shareholders (up to 50 shares) accepting the offer to be covered first and then to prorate all of the larger shareholders accepting the offer. I assume, of course, that there would not be such a number of holders of 50 shares or under as would result in eliminating any accepting shareholders from having at least 50 shares accepted. If you have any problem on this proration system, I would appreciate your letting me know. Our interest is, of course, primarily that of satisfying Mr. Kates and his associates' request. Very truly yours, 33-762 0-70-pt. 4 -10 BARRY H. STERLING, MAJORITY INTEREST IN COLUMBIA S & L NOW HELD BY NATIONAL GENERAL CORP. LOS ANGELES, July 14.-National General Corp., has acquired more than 65 percent of the 894,196 outstanding shares of guarantee stock of Columbia Savings & Loan Association, Eugene V. Klein, chairman and president of the Los Angeles-based theatre circuit operator and entertainment company, announced today. Under terms of the purchase offer, which still has another 25 days to run, for each share of Columbia guarantee stock received by National General there will be issued a $15 principal amount 20-year five per cent debenture and one detachable warrant authorizing purchase of NGC common stock at a price of $15 per share for 10 years, Mr. Klein said. The savings and loan company in which NGC now has controlling interest, for the year ended February 29, 1964, reported total revenue of $6,708,460 and net income of $1,003,499 or $1.12 a share on 894,196 shares outstanding. The company also listed total assets of $105,279,387, real estate loans outstanding of $85,438,790, total savings of $81,630,380, and stockholders' equity of $6,894,416. "While the entertainment industry continues to be NGC's area of principal emphasis," Mr. Klein indicated, “acquisition of Columbia Savings & Loan is consistent with our policy of supplementing income in other selected areas." National General operates 217 theatres in 16 Western and Mid-Western states. Wholly-owned NGC subsidiaries in the entertainment field include: Concerts, Inc., presenters of name talent concerts and stage shows; Carthay Center Productions, formed after NGC received court approval to engage in motion picture production; and Theatre Color-Vision Corp., the closed circuit theatre television subsidiary. National General's net income, after provision for federal income taxes computed without consideration of operating loss carry-forward and excluding capital gains, for the 26 weeks ended March 24, 1964, totaled $1,088,437, or 30 cents a share on 3,592,523 common shares outstanding. This was an increase of 86 per cent compared with similarly computed net income of $586,295 or 17 cents a share on 3,445,897 shares outstanding for the like period last year. NGC ACQUIRES 93.9 PERCENT OF COLUMBIA SAVINGS & LOAN STOCK WITH PURCHASE OFFER LOS ANGELES.-National General Corp., has acquired 839,662 or 93.9 per cent of the 894,196 outstanding shares of guarantee stock of Columbia Savings & Loan Association, Eugene V. Klein, chairman and president of the Los Angelesbased theatre circuit operator and entertainment company, announced today. Under terms of a purchase offer which expired August 9, National General has issued debentures in the principal amount of $12,552,800 and 839,662 warrants as part of the purchase offer, Mr. Klein said. The terms of the offer provide that for every share of Columbia guarantee stock there would be issued a $15 principal amount 20-year, five per cent debenture and one detachable warrant authorizing purchase of NGC common stock at a price of $15 per share for 10 years. COLUMBIA SAVINGS ADDS FOUR NEW DIRECTORS LOS ANGELES.-Four new directors, representing National General Corp., which recently acquired 93.9 per cent of the outstanding shares of guarantee stock of Columbia Savings & Loan Association, have been elected to the board of that financial institution, Nathan Kates, Columbia president, announced today. National General officers going on the Columbia board are: Irving H. Levin, executive vice president and head of NGC's Theatre Color-Vision and Carthay Center Productions subsidiaries; Alan May, vice president and treasurer; Samuel Schulman, vice president and Harold A. Lipton, secretary and general counsel. "Columbia Savings is fortunate," Mr. Kates said, "to add these men of sound business and financial judgment and experience to our board. I know they will contribute importantly to our continued growth and development." |